Stacey Childress, Senior Advisor on Education at McKinsey, joins Michael and Diane for the second episode of a two-part series weighing in on Marc Andreseen and Ben Horowitz’s recent analysis of higher education. In this episode, they react to the venture capitalists’ proposed solutions for higher education and add their own prescriptions along the way.

Listen to the episode below. A full transcript follows.

Diane Tavenner: Hey, Michael. Hey, Stacey.

Stacey Childress: Hello.

Diane Tavenner: Well, we are doing something for the first time here on Class Disrupted. We are recording a two-part podcast. And so here we are in part two. We’ve got the amazing Stacey Childress with us for this experiment, and she’s hanging in there. She came back for number two. So, as a reminder, here is what we’re up to. The three of us all listen to a very lengthy multi-part podcast by Marc Andreessen and Ben Horowitz, very successful and respected VCs and entrepreneurs. And their podcast broke down the problems with higher education and the solutions as they sort of saw them and proposed them. And then also had a third session on questions from X, Twitter, whatever you want to call that thing. So lots of people told us we had to listen to what they were saying, and we did. And then, quite frankly, we really felt compelled to join in this really important discussion. We were super grateful they were having it. We felt like we could add some things. And so in our last episode, we tackled the problem that they had laid out in their first episode. So we did that in our first and really broke down what they got right, what they missed, what some things we had some quibbles with. And today we want to flip to their solution. So, kind of mirroring their approach.

Michael Horn: Yeah. And suffice to say, I think we had a lot we liked in the problems that they identified, some nuance that we tried to add to their conversation to set us up, I think, for a more productive set of solutions. And again, the disclosure that we’re all on the board of Minerva University, and we kind of think that we might be an interesting solution to some of the problems that they posed. But with that as sort of prelude, I think let’s just jump right in. They offered a bunch of solutions as they went down the bundle of their twelve. They talked a lot about how you could unbundle and rebundle a lot. I thought that was an insightful framing as you think about solutions to these operations and these real valuable functions that places play. So, Diane, where would you like to dive in?

The benefits of centering teaching

Diane Tavenner: Well, for me, Michael, the solution episode is where things really got spicy. And you know that really isn’t a surprise. I often find that people are really good at breaking down and dissecting problems, but they often don’t offer very satisfying or promising solutions, especially when you’re talking about big, complex systems problems. And so I’m not surprised that I wasn’t feeling satisfied in that episode. And in fact, I feel like I’ve made this complaint about a lot of the books that I’ve recommended on this podcast. So it’s not that there’s not value in there, but I definitely have some disappointment with the solutions that Marc and Ben proposed and that lots of other people propose, especially when you get into education. And so I guess where I want to start is, let’s just go through some of them, and I pulled a bunch of them out and I’m curious what you all think about them. And so let me just start on the positive, what I agreed with, and we talked a lot about this in the first episode, so don’t have to spend a lot of time here. But I actually agreed with their solution, that one of the things that colleges and universities need to do is focus on educating students and refocus, reignite their purpose around that. And in doing so, they should be able to reduce administrative overhead. And so they talked a lot about how in a number of universities, there are reports now that there are literally more administrative people than there are students, which kind of, to any person sounds insane. And I think we know that to actually be true know they have a perception of cost ballooning. Michael, you gave us some real nuance around that in the last episode, so we can take that or leave that. But this ballooning, this lack of focus, contributes to a lack of direct service to students, and we should just literally, dramatically reduce admin and in doing so, reduce cost. And so I’m curious what you guys think. The last thing I will just say quickly before I turn it to you is I do believe this is something we’ve done at Minerva. Minerva has prioritized student learning, the student experience. The three of us, as trustees know for a fact that the admin is quite lean and that cost structure is significantly leaner as well. So I do think we have at least one proof point that it can be done.

Michael Horn: Yeah. Stacey, why don’t you jump in first? And this is the format we’ll follow for people listening. Diane’s going to go through her list. Stacey, and I will react bullet by bullet, so to speak. So go ahead, Stacey.

Stacey Childress: Yeah. On this one about refocusing on students, I would say refocusing on the purpose of the time in the program, whether that’s two years, three years, four years, because I think you could play with timing as an innovation potentially. But while we’re here together, learning much more, focus on purpose and helping young people expand their opportunity set. To me, it can be an early function of a higher ed experience in your first year or two where you’re able to get better, clearer insight into a path or multiple paths that you may or may not have come in thinking that’s the path you’re on. Now. For lots of kids, they just come right in and go, and that’s fine, but lots of them don’t. And so just like thinking about what’s really the purpose of the first year, what’s really the purpose of that bridge from first to second year, what are we trying to help make sure students get to the middle of their second year at end of their third semester, kind of knowing about themselves, knowing about what comes next and what needs to happen. Just really kind of think of that backwards mapping. If we’re headed here, how would we think about what needs to happen from the beginning to get there? And I just don’t think that’s happening anymore. So I liked the idea that it might be possible for institutions that want to really focus themselves on student development and acceleration to rethink the way the experience works without having to add a ton of costs and in fact, probably be able to reduce costs if they really streamlined around that purpose, therefore that value prop, therefore that experience that needs to be created and managed over time. So they didn’t exactly suggest that. But I do think from a solution standpoint, I think there’s real power there. And we said that with Minerva, we’ve got more of that mindset, but we were able to design it from the beginning that way. Or we weren’t. I wasn’t. I wasn’t there at the very beginning, but not too long after. But that’s the purpose at Minerva, and we’re organized around it and can constantly get better at it, for sure. But we’re organized around it. And I think it’s a thing that existing institutions could move to. It doesn’t seem impossible. It seems really hard, and it would take some time. But I think we have some examples of the improvement of some credentialing. I’m most familiar with it around master’s programs, but I think that actually gives me a little bit of hope that you could think differently about the experience in ways that doesn’t require you to blow up everything but does create opportunities to redesign at the kind of major/degree level. I don’t know. I think it’s possible and desirable.

Michael Horn: Yeah, that’s super interesting. I like also how you said it, Stacey, which is, regardless of what the universities do, they need to focus around a purpose. And so for some institutions, I will be delighted if they say it’s research, because I think that’s a very important societal function that’s different from the one we’ve chosen at Minerva, which is fundamentally students. I think doing so on either end, I think, will reduce administrative overhead and cost bloat. I think you need that clarity. I will say the second add to you all that I think maybe, I don’t know that it’s a disagreement, but it follows from where you were going, Stacey, which is like, I don’t think it’s quite student centered. I think it’s student purpose. And so, meaning, if we’re backward mapping from, we want these individuals to go out into the employment world and society and be able to contribute, what does it. And I think it’s a slight addendum to the student centered language only in the sense that you could argue that the opulent dining halls and residential palaces and so forth of colleges are very student centered in a weird kind of way. But I think it’s because they’ve treated students as customers as opposed to clients. And my distinction there is simply, like, the customer is always right with a client, you kind of got to nudge them and help them because you’re helping develop them. And so that’s my one sort of maybe controversial nuance. But I think we should have teaching institutions, they shouldn’t try to do research, and we should have far fewer research institutions. But I still want some of them.

Diane Tavenner: I love that distinction, Michael. And it’s so interesting how I think about this kind of as an insider and then a parent perspective, in that I actually, as a parent, see those sort of, let’s call them resort style or luxury resort universities as detrimental to the development of people in the 18 to 25 range. And so I don’t ever see that as a positive. But you’re right. That’s what some, especially elite families want. And that’s like driving things. So super interesting. I will just say that Minerva is the opposite of that. As we both know, it really is designed to help develop young emerging adults and their skills. And it’s really impressive on this front.

Michael Horn: And they’ve done that backward mapping that Stacey just described in excruciating, incredible, awesome detail.

Stacey Childress: Brilliant.

Diversification of purpose and opportunities

Diane Tavenner: Yep. Okay, so the second solution that I agree with, and here’s where I’m really going to practice some grace, because I don’t really think they said it the way that I would. But anyway, they seem to believe that it would be really healthy to have different universities and different departments within universities offering really different opportunities and appealing to different people and interests and passions and skills. I think they say that repeatedly, and I believe that that’s really something they care about. And I 100% sign on to and agree with that. I’m super excited about that. Right now. We have one flavor and they’re all vanilla. And how could we have some really different types of offerings? However, in that conversation, they got all caught up in DEI and politically hot topics. And so their discussion of it was kind of bumbly and in some cases came across as sort of biased and stereotypical. We unpacked that a lot on the last episode, so I’m not going to go back there. So instead, what I’m going to try to do is say what I think they would sign on to, given what I tried to hear through what they were talking about, which is what I would call the Todd Rose approach. And Michael and I have talked to Todd a couple times on the podcast, but basically, he really advocates for the end of average, which in his research and work suggests that what we’re promoting in university admissions right now is everyone driving towards being on a very small number of measures, the same as everyone, only better. So it’s like, we’re all going to be good at these three things, and now I’m just going to try to get better than you versus recognizing that the world needs whatever, hundreds, thousands of different things and that different people bring those different… And we would be so much better served if we were cultivating all that diversity of talent and expertise and interest, and if we had a collective university system that was really enabling and doing that. And so I think they were trying to zoom out to that systems level and say, wouldn’t that would be ideal? And I want to throw it to you all, because I do think this concept of like, imagine if students were applying to colleges not because of their ranking in U.S. News and World Reports or wherever we’re getting it these days, but because it was really a good fit for them personally. I mean, that’s the ideal that I think Ben and Marc would sign on to. I think society would benefit from, and I think it would, gosh, just be so much healthier for our young people and our country.

Michael Horn: I love where you just landed, Diane, because to me, it took them a while to get there, which I think is what you’re saying. But I think that was the underlying essence, which is that they were saying it’s not just Math and English Language Arts that matter. If you’re an awesome musician, there should be a way to show that. And then I think it would make it easier, frankly, for colleges to differentiate, which is the art of strategy. Colleges don’t like differentiating right now, to your point, the opposite of strategy. That’s part of the problem. But they had this, I think, somewhat bizarrely said, SAT should be infinitely scored. I kind of agree with it. Like, if you’re really good at math, I’d love to see how high you can get. And I want lots of other performance measures that you could showcase your talents on to show who you are. And you’re going to have this jagged profile at the end of the day. And I think that’s. Again, I’m not sure that they said it that way, but I think that’s what they fundamentally were driving at, and I’d love to see it. If you get out of the SAT as IQ test, I think you can make that leap a lot easier. And then it gets exciting, and I think, Stacey, and I’ll throw it to you here, I think it also gets around in the longer run. This point you were raising in the last episode that we’re actually not ready to leave the SAT, because when we do, it actually becomes worse and more biased toward people who have lots of wealth to develop essays and projects and go on saving the whales and blah, blah, blah. Like things that we’re not sure were about that we’re trying to optimize.

Stacey Childress: For, as I used to say, not really my issue. I’m glad somebody cares about that. I do like the whales. It’s not really my issue. Listen, I am all in on, as, you know, on jagged profiles, both as just a concept and as a common sense approach to how the world actually works. And again, I think that’s a lot of what they got right, both in diagnosis and solutioning, or at least feeding into potential solutions, is there aren’t enough choices. There are 4,000 institutions, but Diane, to your point, there are a handful or maybe four or five handfuls that are really kind of driving what good is supposed to look like, whether that’s right or wrong, and then all the other ones trying to kind of look the best they can against that standard. I actually would be cautious about any one institution, no matter how large or small, how financially healthy or not. I’ll be cautious about saying, do more programs, like, proliferate programs. Michael, like, you have spent some time both advising and teaching at the Harvard Graduate School of Ed Education in the last few years. And I think one really smart thing they’ve done is fewer programs. You know, let’s have fewer of these. And so you can make more sense out of what a degree from Harvard Graduate School of Education means at the end of it, because you didn’t have, however, I mean, there were literally like 42 paths or something, and it’s down in the teens now. It’s like a big step forward. And so I wouldn’t suggest more. I would suggest more in aggregate. Right. And so to your point, Diane, what opportunity does it create for institutions to find their place in the ecosystem on the few things they can just be world class in, even if they’re a smaller institution kind of in the middle of the country, someplace in a charming town, but not a destination spot. But they get really good at a few paths and us developing ways at the system level to let kids know about those young people, know about those options, these different places that you might go. And then the jagged profile, like, if you can have some services emerge for matching jagged profiles to institutions where you don’t have to be one particular profile to do well there. But if you kind of fall in these ways, this is a way to continue to develop on these criteria you want to work on or if you want to look, the guys on the podcast saw college as a way out of being a bus boy and doing dishes when they were 17 or 18. Right. And so I don’t want my jagged profile to be steady state, mostly filled in with things I’m interested in as a teenager and bus boy. But I do want some sense of where I am at that age and where I might want to push in if I’m interested in some other things. I mean, I want sports. So how does the ecosystem develop in ways that allows for, I’ll just call it the supply of opportunities to be there in a very vibrant and differentiated set of options and some way of finding those options with a little bit of intelligence as a student and as a family about my student’s jagged profile. Right. I don’t want my jagged profile to be driven by some of my immutable characteristics, like race and gender and presumptions about what I might like or not like based on that. But, yeah, I’m different from you, Diane, and from you, Michael. We’ve had a lot of things in common and a lot of things that are different from one another. And we always have. Everyone does.

Certifying competence and personalizing through curriculum

Michael Horn: Diane, can I, can I just one quick build off of that because it reminded me of two things. One, I loved it how the implication of what Stacey just said would solve the administrative overhead problem that you started with. Diane. I disagreed with their solution of just slash half the administration. You can’t, as long as the bundle is what it is. And it’s not a go back to operating like how you were in year 2000 because the world has changed. It’s incredibly naive. And so that part of it, I think, where you just went with that, Stacey, is right. The other piece of this that just occurred to me is if you truly get good at the jagged profile piece, then a part I was in total agreement with Ben on was one of the biggest solutions, I think was starting the credentialing thing, if you will. That was actually certifying competence. And I think my conclusion, I’ve written a whole paper about this, about how we’re never going to get to competency-based education unless there are these independent entities that are there to verify competency and mastery. And in practice, it’s really hard to do. Like, we have all these one offs, right? Google, Microsoft, they don’t stand in for the bundle. Once you get into the less rules based stuff, we get worse and worse at it. And so I guess I would just say if we solved it on the front end. Diane, I’m curious what you think, but we actually might build into something that could solve it on the back end. And that would actually lower the price, I think, of higher ed.

Diane Tavenner: Yeah. Like, I’m bursting with things right now. So I’m going to do three things all here at once. One, I want to just add on to this, I think, this is a really important conversation. So here’s what I would offer as a counterintuitive solution to what we’ve just been talking about that I know is true in the K-12 sector. So people think that in order to offer more choice and more personalization, that you have to do it in big structural ways. You have to add, like, a new major. You have to add a new school of something. You have to add, add, add. It’s not true. The way you actually do it and reduce at the same time is in how you’re designing those programs to be significantly more personalized, significantly more differentiated. So you’re actually solving the problem of the horrible pedagogy.

Stacey Childress: Right.

Diane Tavenner: And you’re not expanding the structure of the university. Now, this is so nerdy. Like, if you don’t design education and whatnot, you would never know that this is how you do this. But Minerva is a perfect example. They literally have five majors, five degrees. That’s it. Name me another university that only has five degrees. They’ve just exploded. But within those degrees, the experience is so hands-on, so project based, so differentiated that you can. People are really matching up. And so I think, actually, the path forward on that.

Stacey Childress: It’s super fascinating. And it is counterintuitive, because you’re solving the scale system problem at the unit level. Right. At the unit of the learner and the learner experience. And it actually doesn’t add overhead. It helps trim. It’s fascinating.

Diane Tavenner: It’s my favorite kind of solution, which is, I call the kitchen tool solution. I have a small kitchen. I’m a big cook. I can’t have that many tools. They have to do multiple jobs. So I love it as a kitchen tool solution. Michael, you also took us. So there’s some other things we agree with which we might get back to, but I’m going to take us into the disagree, because you sort of led us there to this fixing the outgoing credential problem, which, look, I think we all agree there’s a lot of disruption happening in society right now about these credentials. Right. And it’s really unclear where they are, because last time I checked, all the elite employers are still hiring people from Stanford and Harvard. So that’s super real. But you led us into their solution, and this might have been one of the most mind boggling proposals. And it falls into a category that’s very natural for people, is when they don’t know what to do, they think you need to do something different. They go back to something versus forward. And what Ben and Marc did was go back to the concept that in order to fix the credentialing problem and the lack of, we should start grading on a curve again. And I almost lost it, you guys. I had to take a break at that moment because that is the dumbest idea I’ve heard in a really long time. It’s a horrible idea.

Michael Horn: Nice of you to bring the nuance, Diane.

Diane Tavenner: Quite frankly, they broke it down why it was a horrible idea. So I’ll leave that to them. What is a good idea, and that’s what we all talk about and what the three of us are driving for is competency, mastery based assessment and learning. And it’s what you’re pointing to, Michael. First of all, I just want people to understand this is a real thing. It’s true. It’s possible. There are competency based assessments that are valid and are reliable. More and more coming available every day. And in fact, one of the big problems is a lot of institutions don’t use them. So we would have way more of these in the market if people were actually using them. And I say this because I built a whole system that does competency based learning and assessments. And now we had Tim Knowles on the podcast earlier this year, like, this is Carnegie Foundation for Advancement of Teaching and Learning and their partnership with ETS is all about this. So let us not believe that these things aren’t possible and don’t exist. They are and they do. And we as consumers have to start demanding them, buying them, using them, making them better.

Michael Horn: Yeah, I mean, here was the big irony, right, which was, I totally agree with everything you just said, Diane, and I agree with them that the incentives currently suck, right. In terms of why there’s great inflation and their credentialing idea. That’s where you can go, right? Like we’re going to have a way to prove mastery and we’re going to say, yes, you got it. No, you got to keep working. Or you as an individual can say, maybe this isn’t my bag. And that’s okay. At this level, I think to learn what you really want and you’re not going to make claims of, I got a C on this because I showed up and I turned it in and what, 30% all those…I’m totally 1000%… I thought the irony was that the credentialing idea that Ben wants to invest in, I think is an answer to this. I will add, I do not think that existing institutions, I know that many hundreds of them, are saying that they are launching competency based programs. I do not believe that most of them are going to be competency based. I do not believe that they are able to untether from the credit hour and move fundamentally to learning for the reason you just said, Diane, they’re not using these assessments. They’re not fundamentally able to move to a world in which learning is the currency rather than time. And I think this is where you have to have a third party credentialer and a new ecosystem of the Western Governor’s Universities, the Southern New Hampshire Universities, et cetera, filled around them. Stacey?

Stacey Childress: Yeah. Yes. I’m not going to yet take the bait on the discrete grading curve thing. I’ll come back to that. I’m going to stay right here.

Michael Horn: You were at the Harvard Business School where you had to.

The role of employers in advancing competency-based grading

Stacey Childress: I’m coming back to it. I’m coming back. I’m going to come back to it because I love this conversation or this thread. Supply can’t continue to develop, proliferate, deepen, innovate without sufficient demand for the type of thing Is what you’re saying, Diane. And so this assessment problem, it’s more than an assessment problem, but it’s an assessment infrastructure that supports a new learning model. That gets us to mastery based, competency based, enables us to do personalization more meaningfully. And this is where I think there was a miss on the solutions part, not about a specific solution, because I love the credentialing idea. We need a few of those. I think Ben and Marc pushing the onus of, or not the onus, but the point of leverage over to others to drive these reforms, I think, is short sighted because they have more power than maybe they acknowledged, and certainly as part of a business ecosystem in the country, have an enormous amount of power as employers to require something different of existing institutions and therefore open up opportunities for new institutions to emerge. New models to emerge. And they can do that, by the way they will and won’t hire. And I know that’s challenging because they need this flux of new talent every year, and they plan for it to be able to operate their models. But unless employers, it’s a hypothesis, but I think unless employers really pressure the institutions that are currently credentialing students to do something different, it’s not going to happen. Like, even the third party credentialer has a hard time taking off if the educational models actually don’t prepare students well to demonstrate competency in the third party credentialing protocols. I think because it’s a market challenge. Even though we’re talking about higher ed and big chunk of it is nonprofit, it’s still a market. And the output of the system is talent. There’s a market for talent. Who’s driving that market for talent? On the consumer, the buyer side is companies, and they’re going to have to exert way more organized pressure than they do now. And I think it’s absolutely doable. And look, there’s a lot of one, I think I appreciate about just the podcast in general was they didn’t really take the bait on super woke versus woke versus non woke. There were some allusions to it and stuff like that, which were fine. But there are employers making noises right now about who they will and won’t hire based on current attitudes, behaviors, speech. And I don’t love that, but I don’t hate it. Okay. Employers can do that. Well, if they can do that, they can do this. They can do what we’re talking about, which is a much longer term, more systemic way to really increase quality, overall quality of learning, quality of the signaling, quality of the incoming talent pool. And so like, yeah, businesses, let’s get organized around hiring and not hiring based on some things that actually really matter fundamentally for the health of the economy, for human flourishing, et cetera, et cetera.

Unbundling the role of the professor 

Diane Tavenner: This point about the power of the employers is in the section in my mind of what they sort of overlooked or their blind spot. And I think it comes to people, we often forget the power that we have. I’d love to come back to that a little bit on another example, but I want to stick here because one of their other solutions was to fix grade inflation. And this was like a solution that was so that they could make the credential more valuable and the value proposition. So it was sort of this adjacent solution to what we’ve been talking about. I will say they got into this whole conversation about adjunct professors versus tenure professors and all of this stuff about whatever. It was a little bit confusing. Here’s what I would say about…I feel like fixing great inflation kind of misses the point here. I think the actual solution that they would be looking for and want is unbundle the role of the professor in higher ed, because that’s actually the problem that’s at the root of the issue. We see this in K-12 teachers have too many hats they have to wear. They’re supposed to teach the kids, they’re supposed to coach them, they’re supposed to mentor them, they’re supposed to counsel them, and they have to evaluate their work performance, and they have to recommend those. Mackle and I have talked about this for years. Those roles are in conflict. There’s an inherent conflict in there. We’re asking these people to play these two roles and then getting mad at them when they are trying to promote kids that they are deeply invested in and care about. And so I would say for that and many, many reasons, they love unbundling. I think they should drop down a level and say, like, how do we unbundle the role of the professor in higher ed? We’ve sort of failed miserably so far at doing this in K-12, but maybe it’s more possible at higher ed. And I think this speaks to your idea of Michael, like, disaggregating the research piece. I just think there’s so much opportunity on unbundling the role of professors.

Michael Horn: Well, and I won’t ding them for not knowing this, but this is exactly what Western Governor’s University has done. They have unbundled the role of the faculty member. They have five different roles for faculty members. Life coach, course coach, instructional designer, I’m missing one, and assessment. And they’re all separate. And it’s one of the reasons I wonder, Western Governor’s University has set up WGU labs. Might all of the expertise that they have developed in assessing competency, because they are a competency based institution, be something that they can spin out so other people can start building toward it and start to do this even more? Diane, I think it’s a great. I’m totally with you.

Stacey Childress: Totally.

Evaluating tutoring as an alternative

Diane Tavenner: Let me grab another one that I disagreed with, because once I get this one off my chest, then I think I’ll feel okay. Which is one of their solutions was, and they sort of said it a little bit, like off the cuff, tongue in cheek a little. But we’re pretty serious about it was like, look, if universities are charging $70,000 a year in tuition, if that’s the price tag of a university, you could literally hire a full-time tutor. It would tutor your young person, know Socrates and Aristotle and sort of in that old one to one tutoring model. And they spent a lot of time talking about a study that we all know very, very well, a study done by Ben Bloom that showed the power of one to one tutoring. It’s true. It’s a real study we all care about. And I think they really lost a lot of nuance around that study and what it actually showed. And for me, a couple of things that were problematic on just the very technical side. You can’t hire a tutor for $70,000 a year that is going to be Aristotle like, that is insane. And as business people, that’s crazy. Please. So that business model doesn’t work. And the second thing that really baffled me in the solution was their complete failure to think about scale here. We can’t even find enough teachers in America. How in the world do we think we’re going to scale one to one tutoring, even if we had the resources to do that? It makes no sense now. They were talking about, like, combos of AI, et cetera. Fine. I would say tutoring is not a solution to the problem of higher ed. It’s certainly something we should be thinking about working on using as a tool in our tool belt, but it’s not a solution.

Michael Horn: I’ll just say plus one. Go ahead, Stacey. 

Stacey Childress: Listen, I literally thought I’d gotten in a time machine and gone back to 2010 when we all started kind of professionally, really moving in the same direction when Bloom’s study was the hot topic and kind of the talisman. This is the model for personalized learning. The two sigma problem is Bloom showed it’s possible with mastery based one to one tutoring, which is a thing. Mastery based tutoring, like, it’s a very specific model of pedagogy, which is a thing they miss, I think missed. So the two sigma problem is, how do we do this at scale? And they made a very good point. We all know what it’s like. We all know the impact that one great teacher can have. And it’s just a devilish problem to try to make a million great teachers, right? That’s the challenge on the human front. And Michael, I know you and I share a perspective on this, like, Bloom’s methodology, like, overstates effect size by. It took me a while to get there on my path over the last 14 or 15 years, but effect size is overstated. Algorithmic approaches to trying to get the technology to mimic that type of tutoring just really hasn’t panned out. Lots have tried again. Hundreds and hundreds of millions of dollars of philanthropy and venture capital into that problem or goal. AI might put us on different footing there. You could really imagine something more akin in some domains to a mastery based model of individual support for young people that could approximate maybe some of the results. I don’t know about you, Michael, but I’m skeptical of the two sigma, the 98^th percentile result, moving kids at the 50th percentile reliably to the 98^th percentile at scale. I think I’d take half that. If I could get 50% to 75^th percentile in a reliable and affordable way, I think I’d be all in on that. What I don’t think is that it is a single solution. It’s always been my problem with this conversation about tutoring, which is it a thing that we’re going to do on the side because other things aren’t working. And so therefore, let’s do one on one tutoring and that works for some kids and not others. And yeah, now we need 15 million great mastery based tutors who can each support three kids instead of just 3 million teachers that we already don’t know how to do. So it starts to get at that challenge. But what I will say is what always continues to motivate me about the Bloom insight, whatever the effect size is, whatever the model is, whatever the scalability challenges are, it’s twofold. One is isn’t that really what we want education to be, regardless of how we actually operationalize it, whether it’s Aristotle and Socrates today, but really some version of ChatGPT probably not going to happen, maybe not even all that desirable or through some other I’ll just use the word bundle, even though I don’t mean it in the way they were talking about some other basket of experiences that allow for the personalization you were talking about earlier, Diane, which technology can help and support, but isn’t a point solution for it. I guess that’s the thing to break out of, like when you see, well, one to one tutoring, and no matter what, it reliably shows this. And if we could just do that. I did think that listen, it was a cheeky aside that they made kind of as a joke, and it did make me laugh. But here’s I mean, I do think this is a good push when we do get to the moment that there are as many administrators and faculty as there are students. And this is true in some institutions that the three of us know, love and give a lot of credit for helping us accelerate toward the wonderful lives we’re leading. Now you start to say, can we really not afford it? Yeah, because maybe we can afford it. We’re just not spending on it. And maybe the model isn’t really one to one, but maybe it is one to one in terms of headcount. And then you’ve got this unbundling idea, Diane, that you were proposing and that I know Michael has talked a lot about unbundling the role of the instructor, the professor. So then you still have the same number of people, and maybe the cost model stays similar, but it’s worth it. It’s way more effective. It’s way more productive because for the same amount of money, you’re getting a 75th percentile result instead of a 50th percentile result. If we could just use the inspiration of the blue model, not say, let’s try to replicate it exactly, but what might it push us to re-examine about the current structure and what might be possible if we weren’t so wedded to the operational model that we have.

Diane Tavenner: We could go.

Michael Horn: I’m just nodding. I think this is a good point. I will say the irony I thought was they said nothing in education scales except for the Benjamin Bloom thing. And it was like, anyway, I’ve gone through my list.

Stacey Childress: The problem is that it doesn’t scale.

Startup competitors in higher ed

Diane Tavenner: Let me just say quickly, because I think we’re going to all be in agreement on this. As VCs, it was interesting that they were surprisingly skeptical of startup competitors. So competitors in the space that could be universities, if you will, new startup competitors. And they cited their major skepticism around what they call the accreditation cartel, which is not surprising because VCs kind of don’t like regulated industries. For good reason, I think. I just would say quickly, I think they missed Minerva here. Minerva is literally a startup against the space that they’re talking about. So we should just say that out loud. I would also say that…

Stacey Childress: They did mention it.  

Diane Tavenner: They did mention it.

Stacey Childress: Yeah. They didn’t talk…

Diane Tavenner: In a separate place. I just want us to know there are some really key people doing some work on accreditation that, if it’s successful, I think will matter a lot. So we should just know that that’s happening. And if folks are interested in that, I think there’s people doing that, number one. Number two, who knows if it will pass in our federal legislation. But there’s some work around enabling Pell grants. So these are grants for low income students to do shorter term credentials, which could get really interesting around different types of competitors.

Michael Horn: Yeah, but I would agree with them here because I think as it stands right now, to launch Minerva took like $100 million to launch UATX took some godly sum of money. College, Unbound, Reach University, Quantic School of Business and Technology. They’re almost the exceptions that prove the rule at present. And I think supply is so limited that that partially explains why costs have gone up writ large over the last many decades. And it is really hard to start something outside the system like the short term Pell you just referenced that is locked to accredited institutions. It is like a whole set of institutions aren’t going to be able to use it. And so it is really hard to start something outside the system because you’re competing with something that does get a subsidy and you don’t. We at Minerva were accredited, but we’ve chosen not to accept that subsidy to this point. I think that’s been the right decision, but I’m just saying it’s created barriers to entry such that I think all the coding boot camps and apprenticeships and other promising sort of stabs at this have struggled. And so I actually thought their point was right. And I’ll just name it like if Stig Lesley, our friend, colleague, his postsecondary commission accreditor does get through, I do think it changes the game. And that’s probably where you’re going with this, Diane. But I think at status quo, Ben and Marc nailed this I would say.

Diane Tavenner: Don’t disagree. And certainly my experience for 20 years in the K-12 environment as a charter school operator and is consistent with the rightful fears there. And as I look about at what sort of, even if initially wasn’t blocked, what’s kind of washed away over the time, it’s a real fear.

Stacey Childress: Yeah. I wonder, just kind of on this startup as kind of some version of a bundle, which is, I think what they’re saying, right. It’s like a competitive institution that has some version of the bundle. I wonder, Michael, is there some pseudo non consumption at a big enough scale happening in the Marketplace? So some of these kids we talked about, or some of these types of student profiles that we talked about earlier, that the current setup just does not work for and creates this enormous debt load and stuff. Maybe if you’re not, Minerva’s charter is to compete with elite institutions, as are some of these others we’ve referenced. But maybe there’s more opportunity, if you really got clear about a student profile or two that is currently not being served at all or being served so badly that it puts them as worse than underserved, like negatively served, that there may be some opening for. Because maybe that kind of place, I guess the finances are still an issue, but what kind of credential does it need if it’s got good partnerships with some set of employers or a couple of industries, for instance.

Michael Horn: Maybe this is a cool place for us to wrap because I think to that point, Stacey, this goes back to the quote at the very beginning of the first episode that Ben led with on the quote unquote scam. What I might say is you got sort of two options here. One, you have an employer driven model, which looks a lot like apprenticeships, which Diane and I have gotten very excited about as an alternative. And it’s learner centered, but it’s actually employer centered as well. And that to me is the two things that actually I would anchor on in the new system, and I think it would get those incentives right, to your point. And number two, I think the other option is we’re seeing players fill the non consumption. They’re the Western Governor’s Universities. They are the Southern New Hampshire Universities.

Stacey Childress: Good point.

Michael Horn: And then my co-host on my other podcast, Future U, says, well, why aren’t more people pouring into this ginormous adult learning opportunity? And I think the reason is because we’ve said for profit, you can’t play. And capital, as you know, likes to go where there will be a return. But number two, the incentives really suck for for-profit right now because they’re incentivized to enroll. And we’ve seen that movie play out. And so that’s the other piece of this, which is I would love to see the accredited players have skin in the game so that if your students don’t get good paying jobs and are going to default on debt, that they have some penalty for that. Then you could open up the capital markets and then start to scale some different looking players against this because we’d be focused on the outcomes at the end of the day.

Media recommendations 

Diane Tavenner: I love that, Michael. I agree. It’s a really good place to wrap. We could continue talking about this for a really long time. I suspect 3 hours were offline. Maybe we should turn to, we didn’t do this on the first episode, but we should do it here because we were listening to that podcast, Stacey. We always do what are you watching, listening to, reading, hopefully outside of, quote, business.

Stacey Childress: Well, one thing I’m watching and listening to is spring training. So baseball’s back. We’re in full swing of spring training in Florida and Arizona, and so I’m drawing attention to there. But then I’m also listening to a novel called the Covenant of Water by Abraham Varghese, which I had not…I know it’s been around a while, but I am totally into… It’s like one of those multigenerational stories that I love. It spans 70 years, from 1900 to 1977. The author is actually the Vice Chair of Medicine at Stanford Medical School. So he’s a doctor and writes fiction. And so there’s like a ton of amazing stuff about the evolution of medical practice during those years. I’m loving. I’m on like chapter 19 of 87, and I’m so glad that there’s that much left of it. That’s how much I’m loving it. Yeah. So I totally recommend it. If you haven’t read it, that’s awesome.

Michael Horn: Diane, what about you?

Diane Tavenner: Well, I have read it and love, love it. So that’s an awesome one. So folks who’ve been listening know that I’m on my way to visit my son in Scotland here pretty soon, and we’ve got an upcoming trip. And so in my quest to continue to learn about that area, I’m actually reading Adam Smith’s the Wealth of Nations and David Hume’s A Treaty on Human Nature. Please do not laugh at me. Sometimes it’s important to read the primary sources I tried to mean. So when we were talking Aristotle and Socrates and stuff, I had to laugh a little and the human nature and the growth mindset. But I think what’s more interesting is at the same time, I’m playing with a new AI application, like I know we all are, that supports sort of learning journeys for people like me who aren’t trying to get a credential but are trying to learn. And I’m having a conversation with it about these readings, and it’s giving me projects and quizzes and all sorts of ways to learn and interact with the material. It’s pretty fascinating. How about you, Michael?

Michael Horn: That’s awesome. I have a few different directions I could go because I’m still on the tennis kick to parallel Stacey’s baseball, but that’s not where I’m going. Last night…So this is someone could figure out when we’re recording these episodes. But last night we went to the Somerville movie theater, which is one of these old-fashioned movie theaters, to hear an author speak. Her name is Kelly Yang. She lives in the LA area. She’s originally from China. She immigrated here when she was like five or six or something like that. And she’s written many children’s books, and my kids had read them, one or two of them. We left with like eight of them. She has a YA novel as well, but the one that I was reading was finally seen, which was what they had read. I’m literally like every chapter, I’m like sobbing. Now, that was not their reaction, but it works on many levels, I guess, is the point. And then her new book that she is launching, and that’s why everyone filled a theater last night is called finally heard, which is the sequel to finally seen. And evidently it’s about the perils of social media through the story of an immigrant family. And so it’s all about how to be happy and extraordinary, which, as she said last night, can often compete against each other in our lives. I’ve been reading so much John Haidt that I was so thrilled that a children’s book author would tackle this topic in a really fun, enjoyable narrative. I’m excited to read it once I finish the first book. But with that said, a huge thank you to our friend Stacey. Thank you for joining us, Stacey.

Stacey Childress: Thanks for having me.

Michael Horn: I will add a huge thank you to Marc and Ben for devoting so much time and thought to the challenges in higher ed, sparking our two reactions. And I hope that they’ll listen to this, and I hope that they will take it in the spirit in which we are offered, which is really building on the foundation that they have laid for a really critical conversation for society, because, as they said, universities have all these warts, and they do all these important things at the same time. And we can hold both of that in our head at the same time. And just a last thank you to all of our listeners for staying with us on this longer journey than usual. But we hope we’ll see you next time on Class Disrupted. 

Michael and Diane welcome Stacey Childress, senior adviser on education at McKinsey, for a two-part series weighing in on Marc Andreessen and Ben Horowitz’s recent analysis of higher education. In this first episode, they react to the venture capitalists’ diagnosis of the problems with higher education. They share what they think the investors got right, call out points of disagreement and each add their own insights about higher education along the way.

Listen to the episode below. A full transcript follows.

Diane Tavenner: Hey, Michael.

Michael Horn: Hey, Diane. 

Diane Tavenner: Michael, we’ve both been listening to another podcast, and it’s causing us all sorts of emotions. I have to admit, I laughed out loud at a few of the texts you sent me because we were both on a bit of a roller coaster while listening to the three-part, six-hour series of the Ben and Marc show on the topic of higher education. For those who don’t know, we suspect it might be a lot of people who listen to Class Disrupted and are kind of from our education world, Ben Horowitz and Marc Andreessen are currently very successful venture capitalists at a firm called a16z. They founded that firm and lead it. They were both really successful entrepreneurs, they each come from software and technology backgrounds. Their firm has a really successful podcast, and then the two of them get together and chat about hot topics on this other Ben and Marc show. From what we can tell, this is a really popular show, especially among young entrepreneurs and folks in Silicon Valley. So they recorded these episodes about higher ed in January, almost immediately, we both started hearing from all sorts of people that we had to listen. And so we did. Things haven’t been the same since. No, in all seriousness, there are at least two big opportunities that I think their conversation presents. Michael, I think you have some perspectives here as well. The first one is, for me at least, to practice what we’ve been trying to promote on our podcast for five seasons, and what I think we both deeply believe in, which is third-way solutions. Which implies that we don’t fall victim to polarized positions and taking sides, but rather we really mine for nuance and extend grace to people in an effort to find win versus win-lose solutions. Especially to problems that we really care about. So that’s the first one, and that’s a thing I want to practice today. And then the second is simply to bring things we care about to a much larger audience and a more diverse audience. We can fall victim to only talking to ourselves in education. And I think we are both just honestly thrilled that Marc and Ben are talking about something we care very deeply about, and that tons of people who follow them are really engaged with the topic and thinking about how to rethink higher ed to better serve students in society. So that’s just a huge opportunity.

Michael Horn: Yeah. Look, I think you framed this well, Diane. I like the approach and the excitement that we have and that anyone would dedicate 6 hours to higher education, to education in general, coming from the backgrounds that they both do. I think that’s a net-net positive. So, taking all that, we’re going to do a response, in effect, to these 6 hours, and we’re going to do it in two parts. So today’s episode is going to focus on the first part of the podcast that Marc Andreessen and Ben Horowitz, Marc and Ben, if we may, released. They dissected the problems facing higher education from what they called a systems point of view, and we’ll talk more about what that means. We’re going to now try to stay away from what they got into in the second podcast, which is when they started to go deep into solutions to what they saw as the problems. And yes, if you’re listening, you’re probably guessing it. We’re going to do this in two parts. So the second episode for us will be mirroring their second episode, where they started to get into solutions. I don’t think we’ll get into the Q&A third episode that they did too much ourselves. We’re going to do our best to be systematic. But I’ll also say up front, they had nearly 4 hours of content in just these two shows. We are not trying to replicate that part of the performance, but we will try to bring the same level of nuance at least that we attempt to do in all of our other shows.

Welcoming Stacey 

Diane Tavenner: Michael, I really appreciate the caveat, because they covered a lot of ground, and so we’ll do our best to make our conversation accessible and meaningful, even if you haven’t listened to Marc and Ben. At the same time, we also want to build on what they laid down if you have heard them. So hopefully, for those of us nerds in education, we’re going to try to differentiate as best we can here. It’s a pretty big task, and so we decided we needed some expert help. Michael and fortunately we have a very good friend who’s the perfect person to help us think critically about the problems that higher ed today and the way its present form presents and to unpack solutions. So I personally am so excited to introduce our guest, Stacey Childress. Many of you will know Stacey, but for those who don’t, Stacey has a very long list of experiences and accomplishments. So I won’t go into all of them, but I will share a few that are relevant to the discussion today.

So let’s start with the fact that early in her career, Stacey was a classroom teacher. She’s also spent about a decade as a software entrepreneur, founder, and leader. So right there, she’s bridging two worlds that are critical today. She then became a faculty member at the Harvard Business School, where she studied entrepreneurial activity in public education. She wrote three books, tons of case studies, and articles. She was a very popular teacher who won awards from her students and the dean. If any of you have ever run into one of her students, you know how popular she is. She’s followed that up as the CEO of the New Schools Venture Fund and Eridaf, which is a whole new research entity that they help to incubate and spin out. And just more importantly, Stacey’s one of the smartest people I know, period and in education. She sees the big picture and can break it down like no one else. Everything I told you takes a backseat to the fact that, in my view, she does what she does because she cares so deeply about kids, and that’s what drives everything. I’ve had the privilege of working with Stacey on lots of things for many years and have experienced firsthand how her heart drives her work to make things better for young people. So welcome, my friend. We are so grateful that you’ve joined us for this, what we think is a really important conversation.

Stacey Childress: Yeah. Thank you so much, Diana and Michael, for inviting me. It’s great to be here and really looking forward to the conversation.

Michael Horn: Never say that till you’re done with us, Stacey. 

Stacey Childress: Thank you?

Michael Horn: Well I should say I was one of those students, so I’ll add that. In addition to having known each other for years, and being friends, we should also just disclose, I suppose is the right word, that we all serve on the board of directors with each other. It’s not just any board of directors. It’s the board of directors of a new university, Minerva University, that I suspect we may end up concluding in the second episode tackles some of the problems that Marc and Ben outlined in their podcasts. I just want that to be transparent front and center, because we’re not only going to come to this conversation as three individuals with expertise in education but also as three trustees who are wearing that hat, and are trying to rethink some of the fundamental tenets of higher education. So with that outline, with that out of the way, if you will let’s dive in. In the first question, which I think is a pretty fundamental one, because in the first podcast, and Diane you helped pull this out. They lead in with Ben saying a very provocative line, and the quote is this. “We as a society are running a scam and ripping off a huge percentage of our young people with the clear expectation that they are going to get a higher quality job and being able to pay for college. But that is absolutely not the case.” So that sort of sets the tone for how they are tackling the problems facing higher ed. Diane, maybe I’ll have you kick us off here rather than throw Stacey into the deep end. I’d love your take on Ben’s first hot take if you will, but then maybe also frame it as a general gut reaction, perhaps, to their first show, where they delve into and diagnose the problems as they see it with higher ed.

Reactions to Ben and Marc’s framing of higher ed’s problems 

Diane Tavenner: Michael, I think it’s a really interesting place to start. It’s literally where they start, and it’s like a fascinating place for us to enter the conversation. Let me start by saying I wouldn’t use the word scam because it implies ill intent. Being one of the people who’s sort of in the system that is behind that comment, I know that I don’t have ill intent. I know that most of the people I know don’t have ill intent. So I wouldn’t use the word scam. And at the very same time, I do think the evidence points to the truth of Ben’s statement. Honestly, for me, that sums up the tension I feel in this opening teaser statement and throughout the entire 6 hours of the podcast.So this quote really does a good job representing it. I directionally agree with so much of what they talk about. I think they really capture so much of the feeling and the thinking and the conversation. I’m really challenged by how they say a lot of things because they can seem, and I don’t think I’m being overly sensitive here. I think they can seem at times careless with their language and what they’re saying and biased. We’re all biased, obviously, but I think that really comes through. And so they’re kind of how challenges me. What I would say is they get a few really important things very wrong. Given how many people listen and learn from them, that feels like, in the best case scenario, a missed opportunity and in the worst case, a setback for addressing a problem that I think we agree on and it seems like we all want to fix. So I’m thrilled that we’re having this conversation and so many people are engaged because we need the entire country to feel compelled to transform education in America. And hopefully that gives a sense of like when we talked about a roller coaster in the opening. That’s the feeling of the roller coaster of emotion I had while I was listening. Then I would just note one other really important element of their conversation, which is for the vast majority of the podcast, they’re talking about elite universities and elite students and learners. While they don’t say it explicitly, well they do a couple of times, but for the most part they don’t. It’s really important to note that what they’re describing is really about highly selective schools. It’s not a surprise. It’s what they know. It’s what they’ve been through. It’s the people they know. But I think we all have to hold on and remember that there are 4,000 ish colleges and universities in America, and only a very small number of them are highly selective or even selective. So this focus on the elites is important because it’s indicative of how our country thinks about higher ed and talks about higher ed. It’s one of the big problems we have, because what ends up happening is a small number of elite institutions end up driving much of what happens in K-12 all the way through higher ed. It’s really the tail wagging the dog and I think they embodied that in their conversation. So it’s very real, but it’s also something we need to be aware of.

Michael Horn: Great way to set the table. We’re not always going to agree on this, but I think this is like framing a lot of the mood of this. Stacey, let me invite you in here and sort of your reactions to the podcast. Also on Diane’s thoughts and that quote that they lead off with.

Stacey Childress: Yeah, well, let me say I enjoyed all 6 hours of the podcast. I had a little less of the roller coaster feeling you guys are describing, but maybe because I wasn’t in a text thread with friends who were listening at the same time. Like you guys, I did have areas I really agreed with and areas I was puzzled by and agreed with less. But listen, I liked it so much, I stretched it into 8 hours. I mean, talk about nerd because I went back and listened to the second episode twice. Here’s why. I have enormous respect for what Marc and Ben have created in the world, both as entrepreneurs. I mean, the way we experience the web today is in large part because of the foundation they laid back with mosaic and then Netscape. And just the hundreds and hundreds and hundreds of entrepreneurs that they’ve helped create new things through their venture capital firm. So I was super jazzed to listen to their ideas for solutions and entrepreneurial opportunities that kind of match the problem statements they came up with. And you know me, that’s what gets me excited. What can we do? What are those opportunities, especially entrepreneurial opportunities? I agreed with a lot of what they said in both of those episodes, first and second, and liked a lot of it. But I think they had some misses. Diane, you mentioned you felt like there were some things they missed. As I thought about it, I came to this idea that some of the misses might have a common cause or problem, which is, not surprisingly, they were often painting with a very broad brush. So a very broad, correct, but broad problem statement. So when you jump to solutions from that, it can be hard. So I thought their conversation would have benefited from some more, I’ll just call it granularity. So I’ll give you my big example of that, which is this value prop idea, Michael, that you started us with here. Ben’s quote, which is value prop’s broken. College is more expensive than ever. Students are taking on more debt than ever because it’s widely available and super cheap. And then all the other bad things that happen. Value props broken, okay, that’s in the popular consciousness right now. There’s kind of general agreement on that. Also the value prop is actually not broken for some students. It’s actually still working for a pretty significant segment of students, and it’s not working for lots of different segments of students. So I think the more interesting question is who is it not working for and why? And therefore, what? So one example of who it’s not working for. Students who aren’t quite sure what they want to do, they go to the college that they match with, overmatch, under match, or it’s just right. Then they end up in some degree plan that they didn’t really think through and didn’t get a lot of help with. They rack up all the debt for all the semesters, and then they end up with this degree. They may have learned some stuff, but the degree doesn’t have any value in the job Marcet or not much value. So they end up wandering around underemployed, not earning what they should. That is a problem. It’s a pretty significant segment of students for whom that’s true. Well, that’s a problem that kind of suggests all kinds of interesting potential solutions and entrepreneurial opportunities or institutional reforms, however you want to look at it. That doesn’t really work in broad strokes, but would work for that segment. Another segment is students who go to college for a semester or three or five, they’re taking on debt all along the way, and then life happens. For whatever set of reasons, and it’s different for different kids, they don’t finish. So they’ve got 20% of the debt, or 50% of the debt, or maybe 80% of the debt of the whole thing, and they’ve got nothing. In fact, they might have less than nothing, because at a very critical moment in their transition from adolescence to adulthood, they didn’t make the most of a very significant opportunity. They started something and didn’t finish. And maybe it’s not fair, but life’s not fair, and that’s now something that has happened. So that’s a different set of problems. You could start to think about solutions… So to say, value props are broken, let’s think of solutions. Provocative, interesting, whatever. But if we really want to make progress, we really want to get traction and have some actual product Marcet fit for things we might create, having a better understanding is, I think, super important. I think that was a bit of a miss. Let me say one more quick thing, because we may or may not come back to this. There was this thing that kept building for me through the first couple of episodes, and again, I was loving it. I was driving through most of it. I had a couple of long car trips. So if I make steering wheel motions while I’m telling these stories, that’s why. I got the sense maybe halfway through the second episode, it kind of crystallized for me. I wasn’t sure if Ben and Marc have a developmental view of human beings. In particular young people, or more of a fixed view of well, they are as we find them so now what. Versus, especially for kids, there was a stretch where they, I’m going to paraphrase, it was kind of like, all right, people are different. Yeah, that’s true. Young people are different from one another and that difference is largely shaped by when you’re 16, 17, 18 it’s largely shaped by your experiences up to that point. Kind of your family, your community, the culture you’re part of and I mean that’s just who you are. So now that you’re coming to college, why would we make you be an engineer if what you’re really immersed in is music? I was really all in with kids are different, they’re coming from different places, they have different interests and skills when they approach the doorway, the threshold of college. So now what do we do with that and how might we make things better? Then it was like, don’t make musicians engineers. I mean, again, I’m being provocative myself here but it made me wonder. I think there was plenty of evidence throughout, that they actually do take a developmental view of people and of themselves. There was just enough of these comments and anecdotes and that really matters. It’s an assumption worth examining. Maybe you don’t really hold it, but if there’s some version of it that you’re used to operating on and then you start entering solutions and potential entrepreneurial opportunities, boy, that could go sideways pretty quickly. So I think that showed up a few times but that’s my example of it.

Michael Horn: Those are great, Stacey. I think already you’re bringing some nuance to the conversation. It’s interesting. I think I’m probably closer to you than Diane, maybe on my reactions to this. We’re going to try to hold on to the solutions one. That was where I had more of a struggle and I started texting Diane more. There’s some errors that I want to get into. I felt like I was more on the bandwagon with the growth developmental view versus a sort of fixed view. I agree that is something that sits there throughout the couple episodes. I felt like Diane’s right that some of the things that they expressed, and we’re going to get into this more, were not the best way to express it. They had this underlying view of human difference and leaning into your unique value that is very top rose that I liked. And I think this is what Diane’s speaking about, is that it spoke against, all the value of college is maybe in who gets admitted which is more about the elite schools and not the rest of it. So I guess where I came in… That gets into the nuance you just painted, Stacey, about different schools get different outcomes. Different students get different outcomes and so forth. I guess from my perspective, starting with Ben’s quote, I heard the frustration in his voice. I think it’s indicative of the mood of the country. I think there’s a lot of reasons to be upset at it because the incentives fundamentally underlying federal policy and spending have not been around the outcomes. They’ve been around just getting the students in the seats. I think you hear so much anger and frustration, like, why are we spending so much effort to forgive student debt. Why didn’t it work? But I think the other side of this is, If you still graduate from college, on average, not for everyone but on average, this is a good value proposition. Like it’s all for most individuals. So that’s sort of point 1. Point 2 is roughly 38% of students don’t graduate from college within six years. You take on debt and you don’t graduate. That is a very crummy value proposition.They don’t get the value. As we’re recording this, there was just a big spread in the Wall Street Journal about this over the weekend. There’s a huge number who are underemployed when they graduate from college. What they mean by that is they take a job that does not require the degree that they just earned. There’s considerable evidence that if your first job is one that does not require the degree, by job number five, you’re still in a track that does not. That’s not, okay. So that is where I think Ben’s quote is right on. And we don’t want to confuse the point that if you’re a low income student and you get into an elite college or university, you better go. I will say the other one, and this is a sympathy one from me for them.I think it’s really freaking hard to talk about higher ed in a coherent way. Look, I’m the disruptive guy, you know? Your office is next to Clay Christensen, Stacey. He got painted with this brush all the time. Everyone thinks that we have decided that all colleges and universities are going to disappear five years ago, and it didn’t, therefore, we were wrong. As you all know I don’t think Harvard and Yale and Stanford are going anywhere. I do think a lot of schools are going somewhere. We’re recording this on a day where Cambridge College just announced it’s merging with Bay Path University in Massachusetts. It’s just the latest, frankly, in England. So both of these things can be true.It is really hard though. In my writing about higher ed, I struggle with this all the time. To talk about which segment am I talking about right now. So I’m empathetic to that. I’ll just throw out a few stats because I think it might be interesting to folks. 59 colleges in the country out of roughly 4000 admit fewer than 25% of students. That’s it. When we’re talking about selective schools, that’s it. I will defend Marc and Ben on this a little bit. I don’t think they’re only talking about elite higher ed because Marc’s alma mater, University of Illinois, I think is like 59% selectivity. So it’s a little bit broader. But I think what they are fundamentally talking about is the roughly slightly under 30% of students today who we would have called traditional back in the day. What I mean by that is that they’re residential, they’re full time, they’re aged 18 to 24, they’re not holding a job while they’re in college. That’s a shrinking part of the pie. And they sort of make that point, but then they don’t fully wrestle, I think, with what that means. So it’s not just elite exclusive, but really more that residential, quote unquote traditional experience. I’ll say the other thing is, and we’ll get more into this, I do think they’re also talking largely about research based universities. We talk about how that’s important. They’re not really talking about community colleges or online schools or schools that focus over teaching. I think you nailed it, Stacey. This is why it’s important to get below the average because your solutions will be very different depending on what segment you’re talking about. Maybe I’ll pause there for a second before I ask the next question I have in case you all want to… alright no.

Diane Tavenner: No, Diane’s like, okay, I think we should get into it. It’s great. I actually think collectively everything the three of us have said really sets the experience that I was having in listening. And I’m excited to talk about how they framed the problem, which I think is really interesting.

The roles of higher education institutions

Michael Horn: Yeah. So let’s do that. Because at the outset of the show, and to frame that problem or problems, Marc posits that there are twelve core functions of a university. And I want to list them here because this was the framing for their diagnosis. And I thought there were some novel parts of this from my perspective. Number one, he had credentialing agency. So the degrees. Number two, the courses, the education that you take. Number three, they called it the research bureau. Number four, the policy think tank. Five, moral instruction. We’ll talk more about that, I suspect. Six, they had the social reformer, which I don’t think actually would have been something that maybe people would have pointed to a decade ago. But with the current news around Deni and a lot of the fervor over that topic at the moment, this is very big. I think right now, the 7th one they had was immigration agency. And so just to explain it for folks, basically the notion that higher ed is an attractor of international students, many of whom pay full freight and help make the business models work for these places. Number eight, they had sports league. Number nine, they had the hedge fund, which referred to the endowments. And I’m just going to caveat this up front, very few institutions have big endowments. Okay.

Diane Tavenner: And they did acknowledge that later on.

Michael Horn: But, yeah, number ten, they had adult daycare, which points to the residential point that they were talking about, that segment. Number eleven, they had the dating site, which also points to the residential piece of this. And then twelve, they had the lobbying firm, which I think referred to the fact that government funding actually sits underneath a lot of the higher ed business model in ways that I don’t think are widely appreciated. And so it was an interesting set of points. So I think the question here is, in your view, if those are the twelve areas that they outlined, what would you have taken out? What would you add? What nuance would you add? What they get right. And for this one, Stacey, let’s start with you.

Stacey Childress: Yeah, well, listen, I like that they took a systemic approach like that, and that they took an operational approach. They call those operational areas or areas of operation. And I do think it helped in a good way, kind of categorize the complexity of these institutions. And I’ll give them a little bit of praise for that because that doesn’t just stay at the surface level and treat everything as kind of a black box. Like, let’s break it out. What are these different roles or operational functions that happen in universities? And you asked what would we may take out or add to the twelve. Surprisingly, I wouldn’t take out any of them. People who know me know I hate long lists. Like, I make fun of them. If a top ten list is good. Some people think a top 72 list is good, and so then you just say everything you can think of. And so I can be really hard on long lists, but I actually tried to break this one and felt like it was pretty good. You might be able to consolidate a couple of them, but in general it’s a good list. But what I found myself doing, especially during the first episode, the problem identification and analysis was twelve is still a lot. So how might we prioritize these? And if we were to prioritize them based on what, to what end? And so I was like hungry for a pull up that was about purpose or maybe purposes, creating what value for whom? And then can you kind of bundle into some prioritization groupings, the different functions, but in general, I liked them all a lot. I know we’ll get into this purpose question and whether you prioritize the student or some other actors, and can you design around that? But before we started thinking about how to talk about it, my in the moment reaction to the list was, I think this is good. Also. I think this is good, but I don’t know which one would I put on the top three, because you cannot prioritize at the same level of attention and resources. Twelve things. And so I was thinking about that in terms of what I, well, before I say what I might add, you kind of called out the moral instruction and social reformer, Michael, and my reaction to those good. When they was listing them off. Oh, good, yes, let’s talk about those. And then when we got to their discussion of them in the first episode, I felt like their categorization was super thin, maybe is the right word to describe it, like moral instruction. Just again, from a developmental standpoint, the years of 14 or 15 through age, 25 or 26, is like prime time for developing moral reasoning. And we can like that or not like that, but it’s actually true. So if you’ve got tens of thousands of young people being adult, babysat on college campuses and you’re not attending to moral reasoning, at least I think that’s a big miss and quite frankly, kind of impossible. So if you’re not doing it on purpose, it’s happening. And so I heard their critique of what is happening and agree with it. I think random professors trying to impose their personal moral framework on young people. So advocacy disguised as teaching, I don’t like it. I worked hard not to do it in any context, especially in the university context. It’s hard to never do it, but I worked hard at not doing it. And so as an alternative to wild, wild west and what seems to be sort of what a default dogma and groupthink that ends up emerging. I’d rather a purposeful consideration of what might moral instruction mean if it weren’t imposing a set of values, if it were instead attending to what we know kind of our inputs into healthy moral reasoning as we enter kind of mid adulthood. And then social reformer, we will talk about the DEI. I thought it was, again, shallow, or I don’t mean shallow like dumb or craven, but like thin to only talk about DEI in that category. Because I do think. I think we have pretty some. We have agreement on this call. I think we have pretty broad agreement in society that education, including higher education, can be a real engine for social mobility for young people. And in that way it is engaging in a type of social reform which is the class structures as we have them, or it’s at least possible for them to be permeable, right? And that education, like, it’s the story of my life. None of my grandparents finished high school. None of them. My parents finished high school, but they did not go to college. But they made sure my sisters and I all could and kind of the rest is history. There are clear, accelerant benefit to the higher education I and my sisters and now my nieces are receiving. And that’s kind of a social reform of sorts. And I think it’s important to think through where that’s working and not working. And as a design question, what might we do similar and different to what we’re doing? And we got mired in the DEI conversation, which I do hope we talk about, because I do want to unpack it. But anyway, so thin categories, I would add major regional employer. I think sometimes we miss or forget that for a lot of these institutions, including the large and not so large state systems and other kinds of private colleges, just because of where they end up locating, they end up being one of the largest sources of middle and working class jobs in geographic regions, like they’re a hub of the local economy. And when you start to talk about we’re cutting at 20% or 50% and we’re going after administrative costs, it’s probably not the director level people that are getting cut. It’s like the assistance, the administrative assistants and folks who work in the operations plant and that kind of thing. And so it doesn’t necessarily mean you shouldn’t take on administrative costs. I agree you should, but I think not acknowledging that in addition to all the other roles it plays in most communities where these institutions exist, they are a major, if not the largest employer. So that was the thing. I would probably add and think through the implications of great set of points.

Michael Horn: Diane, why don’t you jump in?

Diane Tavenner: Yeah, I love that last point. And reminder about the regional employer. I didn’t think about it until Stacey brought it up, and it’s profound in terms of communities that these institutions are in. I just want to underline, highlight, exclamation point, what Stacey said about the moral instructor piece being fairly limited or thin. I think that maybe came because they drew on the universities, as many of them being originally founded as religious institutions, which seems really sort of somewhat disconnected from where we are today. It feels like there were some big gaps there in historical development and yes, about human development, the age range, et cetera. I was thinking about the language choice of social reform, and another way you could frame that whole category is just like, are we promoting and supporting the american dream? And that’s going to appeal to some people in our polarized society, like social reform, some like the american dream. It’s two sides of the same coin, in my view. In terms of my thoughts about the list, similar to Stacey, well, I had never thought about those particular buckets. And so it was provocative in a really thoughtful way. I was doing this side by side comparison of how I would think about k twelve institutions and higher ed and what’s the difference? And do those buckets line up or not? That’s probably a different episode, but it helped me kind of think through them. Plus, I was layering in our experience at Minerva, which is really interesting because Minerva is a modern university, very young, designed to address a lot of what Marc and Ben are talking about. And so many of these buckets are really absent from Minerva’s operations. And the focus truly is on students, and I will know to steal sort of their punchline. I do think Marc and Ben make a compelling case that universities should, they believe universities should be focusing first and foremost on students, which I think is at least totally aligned with how I think we see the world anyway. So I was using those sort of experiences as I was thinking about their list, and again, couldn’t poke a lot of holes in it and didn’t really want to leave anything out. I did think adult daycare was interesting because we talk a lot about it in k twelve. We call it custodial care, but I hadn’t made the direct connection to higher Ed, and maybe it’s their sort of provocative title or naming of it that really makes us think that way. But it made me realize and think about the dramatically different experiences 18 year olds are having in our country when they go to a residential, sort of country club style four year college experience versus those who are literally going directly into work. Many of them will meet at home with families taking on huge responsibilities. And so there’s just these really polar, disparate experiences, which is fascinating to me and connects back, I think, to what Stacey’s talking about of like, we really need to segment and think about who’s not being served more than this broad brush approach. And then I would know. They didn’t spend a lot of time on the dating site element of it. I didn’t get the sense that they personally dated a lot. So maybe that was it. But I will just say, and sadly, I think my experience is not that different from a lot of people, but I was raised to go to college by my mother to find a husband. And I’m old, but I’m not that old. And so that’s just, I think, very real and prevalent. Yeah, interesting category. The one I would think about adding is what about something along the lines of like, Marceting, brand management and development, winning elite ranks and awards? It seems to me that universities are spending an extraordinary amount of time and resource on.

Stacey Childress: So that’s the only thing like reputation building and management. Yeah. That’s interesting.

Michael Horn: Yeah. Super provocative one, Diane, because when I think about that, I think of it as an outgrowth of some of these functions, but you’re right, it’s taken on its own life. Indeed, the story of northeastern university becoming a top 25 university is manipulating the US news world rankings like an outward, cynical, completely straightforward way to become a top 25 university.

Diane Tavenner: Well, and my alma mater, University of Southern California, is maybe one of the first that really did employed enrollment management to this end, et cetera.

Michael Horn: Yeah, it’s a really good point. I will say, stacy, also, to your point about how there was sort of a lack of prioritization of the twelve, I think to some degree it actually wove into Marc and Ben’s point, which is that there’s so many different stakeholders here that that’s why it’s really hard to manage these institutions. I do happen to think that there is one of these that sort of rises above the others on these campuses, but we’ll get into that in a moment. I will say, overall, I like how they pulled this apart. I’ve always thought and written about it somewhat differently. Mine has been that colleges and universities are essentially running three incompatible business models. And I suspect I’ll get into the implications of that later. But the three I’ve always listed in the bundle are, number one, research, which I would view is what I call a solution shop business. Basically, we throw a bunch of stuff at a problem. We have lots of experts working on it. We don’t know if there’s going to be an outcome here or not. Some of it pays off, some of it doesn’t. Right? But we hope so. Okay. The second is what I call the teaching. And they treat, colleges and universities treat this as a value adding process business. We ship in this class of students, I deliver the content, I ship them out the other side. And yeah, I’ll leave it there for the moment. And then the third is what I call the social network, which is really a facilitated network business. It’s people who participate in the network not for its own sake, but because they’re getting some other value out of it. And my sense is that this is the one that Marc and Ben missed the biggest because, and I think it’s a huge one because yes, they have the dating site and the credentialing function, but those emerge from the college’s role in building social capital. And colleges are the original social network. I mean, Facebook started out by replacing the print Facebook on the Harvard college campus. And to me, a lot of these things, it’s not just the social capital in your class or with the four years that are co living with you at that point. It’s really across years. It’s really why elite higher ed, in my judgment, the value is their exclusivity because you’re part of the tribe. Human beings as social, we like tribes, we like comparisons. And so I think that’s the big one that I would say I felt was missing from the list, even if it glimmers of, it sort of appeared.

Stacey Childress: Yeah, I think that makes sense, Michael? Yeah. We can unpack some of the aspects of that social network that might come into play as you’re thinking about solutioning towards better outcomes on some of these other dimensions, I think is really interesting idea. And I like your three buckets a lot. They’re a little more manageable for me.

Michael Horn: I think in threes, right. Is that better or worse?

Stacey Childress: Right.

Where they got it right

Michael Horn: But broadly, it sounds like we don’t hate their list. We think that they got with some nuance that broadly speaking, it’s pretty provocative and makes some sense. And I guess of that they diagnosed problems in each of those twelve. What in your views did they get right? And before we do the wrong, let’s start with the right. Stacey, what would you give them the check Marc on.

Stacey Childress: Yeah, I mean, I’ve alluded to probably most of these already, so I’ll just tick them off. Like the value prop analysis that we talked about. Like, I’m not sure they’re 100% right on all of the components of what’s driving the problem there, but that actually doesn’t matter. I think that they’re right that for many segments of students, way too many. It’s just not working. The promise doesn’t live. The outcome doesn’t live up to the know. I think they got right know just kind of appreciated both their take. Know some of your take, Michael, on the structural, like the economic structure of the field that’s driving so many of these problems and how interdependent the different variables are and how difficult they are to disentangle and address independently. And I think they got that right. And of course that drives part of the value prop problem, but is a problem of its own. And I felt like they just kind of nailed that analysis as it relates to relatively well resourced schools. I think they missed, as we were talking about already some this other big segment of schools, the credentialing signaling function. Like, I’m glad they spent some time on that. There’s some signaling about attending, as I referred to earlier, most of the signaling is on getting in and then also finishing. Unless you’re Marc Zuckerberg, right? Unless you’re Bill Gates or Marc Zuckerberg, where quitting is sort of your badge, like for everybody else, it’s the getting in signal. And then I got through it. Signal that’s so important. And Michael, as you I think so, pointed out so well a couple seconds ago, it’s the first job, and more like it matters a lot for first job and second job, third job, fifth job. But it matters for a lot of other things that the signal is not just about fitness or readiness for a particular entry level position. It’s also about who you belong with. And I think in that sense, there’s enormous power and huge challenge that we ascribe so much signal or so much value to that signal. And it’s real, it’s shorthand for lots of stuff. And I have personally benefited from it. I am aware of the benefits of this signal, of where I got my graduate degree right, and it’s enormous. While there were some things I disagreed with or a couple of things I disagreed with and some things that made me wonder and think hard about, which is good, I actually agreed with a lot of their DEI analysis, which may be a surprise to you guys and maybe a surprise to some listeners. So let me say why? What I think they got really right, and I think Ben really carried the ball, know, carried the torch here. The discussion about diversity, equity and inclusion needs to be grounded in some sort of purpose and outcome that we are aiming toward. And in this domain, our organizations, any organization, and in higher ed institutions, it’s got to be anchored in talent. What is the talent we’re trying to track to pursue? What opportunity or what opportunity sets? And how do we think about our channels into pools of talent that might not be naturally historically or naturally connected to us already? And how do we dig those channels, cultivate them, maintain them and make them matter? How do we create a climate and a culture of learning and community and dissent and learning where people want to be, people from different backgrounds that get to the threshold can find their way to thriving in our community? It doesn’t happen by accident. And I think, as they well pointed out, that sometimes if you’re only going for the box, checking in terms of characteristics and you’re not doing the hard work of what happens when everybody gets together, that’s a real problem. And I think we find ourselves in a moment where that’s happening in many places. You got to do the hard work of removing any implicit or explicit bias that might, your admissions processes for students and your hiring processes for faculty might be laden with these biases that you just are unexamined and can be tweaked to make it more possible if you’ve got the great pipeline to see what you want on the other end of it without having to engineer quotas, right? I just think they’re absolutely right about that. So let me just kind of sum it up and say when DEI programs, most of them are probably started with. I think we’re starting with good intentions, maybe not all. I think most of them probably are. But when the design process makes its way into a self perpetuating bureaucracy that’s in charge of it, that then has as its main function, because it’s what bureaucracies are good at, compliance and control box checking, policing. That’s where it goes wrong. And I think too many places are demonstrating what it looks like when it goes wrong. Not every place. I think Ben gave a great example of how they thought about a DEI strategy. They didn’t call it that, but a talent strategy that prioritized diversity, equity and inclusion, even if they didn’t use those terms to build the firm they’ve built. And that’s a great example. Three of us have examples, too that we could name, and I won’t. But it can go very wrong and in many places has, and I do not fault them in any way for being, I’ll just say what courageous enough to actually have that conversation and say, here’s what they see happening in some places. Now, again, I have some disagreements with the way they approached some of the conversation and where they ended up on a couple of things. We can talk about that later. But I thought that analysis of not in general Nadei program is inevitably going to get there. But, man, it sure can get there if you’re not really clear about what you’re doing and why. So I’ll stop preaching.

Michael Horn: No, that’s a great set of thoughts, Diane.

Diane Tavenner: Well, I will just say I really like Stacey’s points and wish to be associated with them. I will just add to what I thought were big and important points that they made again and again that I really think are at the heart of the problem, the first being, and you alluded to this, Stacey, but the purpose focus of universities is currently so many of them not, I mean, really the rule versus the exception, quite frankly, is to not be focused on educating young adults and preparing them to launch into successful careers. And we talk constantly about the importance of k twelve having institutions having clear purpose. And our bias is that they must be educating young people to successfully prepare and launch into an early adulthood. And here’s the next level. And they’re not focused on that. And so I think that they just really hammered this point over and over and over again. And I really think it was at the foundation of what they were talking about and doing that feels really key to me and I really appreciate them for it. I think what they got to is universities have far too many competing purposes and they have far too many constituents in a very elaborate bundle of what they’re doing that’s evolved over time. And so to me, that was the big macro takeaway there in terms of the problem definition. I agree with it at the high. Well, let me just say, as you know, Michael, this season I’ve been reflecting a lot on the simplicity of running a company versus the school system. And I would say this is the perspective, obviously, that Ben and Marc bring. That is their experience and their expertise. And it really is very true to know businesses are more focused, they have fewer priorities, they focus their constituents, and we do not do that in education for good reasons and lots of things. But there’s a real contrast there.

Michael Horn: So those are my key that all lands for me. Stacey. I’ll just quickly say maybe you’re surprised. The de nine points you just made all lands with me as well. And I was largely sympathetic on the way that, again, there’s some places where you want to set it that way. But I was largely feeling like, yeah, you got the big headlines and currents. Right. This is what I’ve been experiencing on the Harvard campus the last semester and a half. As a faculty member, I’ll say, as a jewish faculty. So I think that was right. And, Diane, I also agree with you. They, I think, correctly say student ain’t the central focus. Right. And that there’s many stakeholders and the right one isn’t being prioritized. I’ll have a hot take of how to frame that. That’ll be a little bit different from student centered later. So you all can yell at me then. But at the moment, I would argue it’s largely the media. Sorry, the faculty, which I think is consistent with their view. And then they have some head nods to the media driving that a little bit as well. I’ll quickly run down them research. They talk deeply about the replication crisis and that it’s probably worse than we realize with a lot of fraud going on. That’s consistent with what I’m hearing as well. Most of the research that gets produced isn’t read. Much of it isn’t useful. That’s consistent with what I see. I agree with them. The incentives, I think, are really bad in the academy around this at the moment, around the publisher, parish incentives and tenure, and the federal government role in all this is stuff that I’d heard a little bit about. But actually, what they brought to it was somewhat new to me and made some sense. It was interesting, in any event, credentialing and know again the value of the admissions for lead, higher ed. And the piece of paper saying you graduate. Yeah, I agree with what you said there, Stacey. Sports league. This isn’t true for every institution, obviously, but I do agree with Ben that for those places that are running big sports operations, it is corrupt and immoral at this point. And I have a major problem with it as well. And I like college sports, but I think we got to make some changes. Hedge fund. I appreciated the nuance that they brought to this one. It wasn’t one of these, but look at the endowments. They should be able to afford everything. They were properly nuanced. The operating budgets of these places are huge. If you were allowed to spend every single dollar, you would wind through that endowment really quickly. Number one. Number two, most of the dollars are dedicated to certain causes or faculty positions or whatever else, and you can’t just sort of spend it on area of greatest need. Immigration agency. I never, ever would have phrased it the way that they did, but I don’t think that they were wrong on it. And then just last one, the growth of costs because of the bundle and the administrative overhead, being a big driver of it, in my judgment, they got this fundamentally right as well. Obviously, DEI is a portion of that. But I think fundamentally, when you run such a complex operation with pieces that don’t necessarily go together to manage those pieces and be successful, administrative overhead rises. That’s not just in colleges and universities.

Stacey Childress: Right.

Points of disagreement

Michael Horn: That’s everywhere. Right. The more product lines you have, administrative overhead rises. And so I think that’s driving a lot of this. I thought it resonated. I might have been, well, we can talk about solutions later to that. Okay. But I’ll leave it there and say if that’s what they got right, let’s get to the juicy stuff of maybe the important nuance that perhaps got lost or what they got wrong. We’ve already alluded to some of this, so we don’t. But where would you want to take this?

Stacey Childress: Yeah, let me name a couple of things. Michael, like you said, we’ve already sort of referenced, or at least I have. I think we all have some of the things. You know, Diane, you said a few minutes ago this thing about what we would love for the purpose of universities to be right is getting kids that next phase of launching towards successful adulthood, human flourishing. Right. Young people who are ready to thrive throughout their lives, live a good life, take care of their families, all of that. And they got that right. But there was this weird, maybe that’s too. For Jordan, there was a strange thing, again, breadcrumbs throughout the first episode, a little bit in the second, where the assumptions seem to be that all too often, colleges are forcing kids into career and life paths that they don’t want to be on. And I just don’t think there’s nearly enough forethought and. And structure and focus on helping kids pick anything totally. Well, let’s be clear.

Diane Tavenner: I’m starting a new company because we’re just not doing this.

Stacey Childress: Right anywhere. Right. There’s like this side trip about Russia or Soviet Union create leading, kind of getting to gender parity in. Scientists and engineers were both same number or same proportion of men and women, which solved a problem that we still struggle with for people who care about that. And I was like, oh, this is interesting. Let’s see where they go with this and where they ended up going with it was. It probably kept a lot of women from doing the things they would have preferred to be doing rather than being a scientist or an engineer. And I was like, I mean, maybe, I don’t know.

It could be. I kind of laughed and felt weird and all of that. But I guess the general point is, even though they did say got right, should be more focused on centered around students. What I felt they got wrong, sometimes explicitly and often implicitly, was over crediting the institutions for having some mechanism for helping kids move across paths that they might be interested in, so much so that they might be forcing them into pick ones that they were going to make a lot of money and hate.

Diane Tavenner: I totally agree with you. I mean, higher Ed is, in my view, highly disconnected from careers and employment. And so it was very bizarre. Similarly interesting to me. And I think one place that they got wrong and one place that I was feeling a lot of emotion as they were talking was they seem to really like IQ tests, and they seem to think that the SAT is essentially an IQ test. And they find the move away from such tests really problematic in terms of the admissions process for colleges and universities, which we established at the top of that episode, is actually a very few number of them that are using those things to select. But here’s what I would say. I just think there was a ton of nuance that was lost in their conversation. So let me just share a couple of things. For starters, the SAT isn’t equivalent to an IQ test, at least in its current form, and just even at a superficial level, because you can study for it and you can literally raise and improve your scores with practice. And so by definition, it’s not an IQ test for that reason. And this is a really critical nuance for folks like us, because we see very clearly how much the financial status of your parents gets conflated with the intelligence or giftedness. When people fail to recognize that this is a test, it’s not a pure identifier of the smart kids, which it felt like Ben and Marc really seemed to want and think it is and was in this kind of nostalgic way, like identifying these unidentified, brilliant people out there. And not to say that we haven’t all heard a story of that. Right? So they exist. I just don’t think it’s a systematic thing. I would also just add that the creators of the IQ tests, as I understand their positions and whatnot, and those who work on them, and honestly we just finished talking with Scott Barry Kaufman recently about this. They express real danger in using it as a screener for employment opportunities and things like that. And in fact, this is exactly what SBK was talking about. He’s like, I went in to study these tests because I thought they were evil and discovered that they’re not evil because there are real correlations and things that he didn’t expect. But you have to be so thoughtful of how you’re using them and take real care with them. And I felt like that was lost in kind of how they were sort of wistfully wanting to use them. And I will also just add that Marc and Ben seemed to be less than impressed with the actual education happening in universities. And so they talked a lot about the value being the selection on the front end, and then employers four years later using the signaling credential. I forget, what was the word that Marc kept like, that you completed? It wasn’t persistence, but it was something like that.

Stacey Childress: Conscientiousness, maybe.

Diane Tavenner: It’s true. It’s true. But I was misty, like, wait, what’s.

Stacey Childress: Happening for in between adult daycare?

Diane Tavenner: Right? And then they said this funny thing where they’re like, we really need the colleges to do this. Or they implied this because we, as employers, can’t give IQ tests because it’s illegal. And so we need you to sort of screen for us. I was like, that was bizarre. I just feel like there was a lot wrong and confusing in that entire line of the conversation, which took up more space than I would have thought it would have taken up. And this is where I’m going to loop back to the points you all were making earlier about what I would call growth mindset. And do they believe that humans developed or is intelligence fixed? We’re actually going back to some of the early philosophers that they’ve cited, and at some point, we’ll get into one to one tutoring and how they were thinking we should be like Aristotle and Socrates. But I think it’s a perfect example of.

I don’t know exactly where they stand on growth mindset. It wasn’t clear to me, because a lot of the things they said sort of represented a fixed mindset view of humans. But then they have these real growth mindset parts. And so that’s probably very know. Humans are. We’re not one or the other. We flow in and out of those two states. Yeah, let me just leave that there.

Michael Horn: Let’s pause on the sat thing for a moment. Stacey, I think you have some thoughts on that. And then, Diane, maybe let’s circle back rest of your.

Stacey Childress: Like, I’m conflicted in this SAT conversation. Not like formally conflicted, but I feel conflicted. Not just in this conversation, like in any conversation about SAT or ACT or standardized tests of any kind, when we talk about them as a threshold marker of readiness. Look, I don’t think those tests are perfect. In fact, they’re way not perfect. Right. They’re far from it. For all the reasons you said, Diane, and I won’t repeat them all.

I’m also a big fan of all the new forms of assessment that are coming into being and use. We can call modern forms of assessment that are more focused on what you’re learning, like how you’re progressing along a set of competencies, maybe from novice to mastery, or however you think about it, and kind of embedded in a learning environment rather than stop and take a test. I’m a big fan, as you guys know, of all of those. I have invested in lots of them that didn’t pan out and some that are still in the works. And so I might be about to lose my badge of personalized, competency based forward thinking, but I just think we have to be realistic about what we’re asking, what we’re hoping for. When we ask a constituency like top tier employers like Marc and Ben are, and they represent lots of them, right, in their companies and in their colleagues at other venture capital firms and similar professional services firms, they have long seen those kinds of instruments as an indicator of something. Now, to your point, Diane, kind of agree they’re not quite getting the nuance sense of what they do and don’t tell you, but at least it was something that seemed independent in third party. And if we’re saying you’re wrong about those, don’t even use those.

We don’t really have the thing to replace it with yet. Let me say it differently. We don’t have the ecosystem to replace it with yet. We’ve got a lot of really interesting things happening, some things that are actually way far along, but none of which are totally market ready for broad, scalable, valid use that are also already adopted at scale. And so the alternative to don’t use this thing that’s wildly imperfect, but that you like, instead use nothing for a while while we figure this other stuff out. I actually think that’s what they’re really. Maybe I’m giving them too much credit. I think that’s what they’re really expressing as a frustration, not, I have to have an IQ test or give me the SAT because it does all the things it does and it’s an IQ test.

I think they’re saying, I need something like, if you’re taking those away, you got to give me something that validates what the threshold level of skills, abilities, competencies, ability to learn, ability to grow are, which I think is a little ironic since we’re wondering about their growth mindset, belief. But so that’s like, I’m not for or against standardized testing in the broadest sense. I have real challenges with them. And I also just from a change management standpoint, especially at the sector level or at the societal level, we can’t just say, those don’t work, stop using them. We’ll get back to you in five or ten years and tens of billions of dollars later in investment when we have the things that replace it. So I think that my sense is that’s part of what we were hearing from them. I don’t know. Yeah.

Diane Tavenner: What do you think about this, Michael? And I’m just going to say that they’ve had an impact on us because we’re over the hour, Marc. I don’t think we’ve ever recorded an episode that’s over an hour.

Michael Horn: No, I know. I’ve been watching that. So for those who are listening when.

Stacey Childress: We keep this, if you’re still listening.

Michael Horn: You’re still listening, we apologize. But on the SAT point, I don’t want to get into the solution piece of it because I think there’s an interesting strand here you could follow. But I will say my biggest frustration with the problems episode was where Diane was as well on the IQ point. But I will say what I found interesting about it and why I was so excited to keep listening is I think it’s a very interesting window into how employers and companies are thinking. Totally is one of those places where interpretation can become reality. Right. If this is how they interpret the world, it could be right or wrong. But if they walk away from it because it doesn’t matter now, I think they would argue back at us and say, well, high school grades are not helping people distinguish anyone because of grade inflation and et cetera, et cetera, I think they’re right on that. I think there needs to be some objective measure to Stacey’s point, third party measure. And I don’t think the reason companies are dropping degree requirements has anything at all to do with the fact that colleges are walking away from the SAT. Those are totally independent phenomenon. And as we’ll talk about, yes, employers are turning away from degrees on the front end, but they are still actually, in fact, hiring based on them, because HR managers are different from ceos. And they never got fired hiring IBM, and they never got fired for hiring someone with a. Like, the PR release on the companies is very different from the reality how people are still. I guess that’s the other piece about it that I’d say. One other thing I’d love to point out before we start to wrap on this episode, which is they talked a lot about the increase in tuition, well, outpacing inflation. I don’t actually think that’s the story, because if you look at the last 15 years, if you look at list tuition, they’re right. But if you look at net tuition, meaning after discounts and scholarships, it’s not correct. Like, it’s actually relatively flat over the last 15 years. And what I think is really going on is that spending, so, like, the cost structure of these places that is going up and up and up. It’s why there was a whole decade of launching overpriced online master’s degrees that made huge profit to basically hold up the other parts of the bundle. And then everyone of my higher ed friends say, michael, online is not lower cost. You’re wrong on disruption. I’m like, no, because it’s in a business model that’s failing. Right. I think that was a very big thing that they missed, is that it’s not tuition, it’s the costs. And the reason the costs are going under is because of the are going up. Like this is one, the bundle, but two, it’s because they’re also trying to improve the. So, you know, when Stanford adds the high class dining facility, or actually I should say it the other way, right? Stacey, when Harvard Business School adds Spangler, Stanford Business School better respond, right? And so when one place adds the student success function or the DEI support or whatever, it is like, hey, the diversification of students, we got to support them. You better bet other places better respond. So it’s the fact that these places have negative economies of scale. The administrative overhead keeps going up because of the bundle, it’s expensive to manage and that they are trying to improve in their current paradigm of improvement, which we’ve all say we’re not sure that they’re improving against the right things, but that’s sort of what’s driving the fundamental cost structure that I think is out of whack is what I would say.

Diane Tavenner: Yeah, makes sense. That makes sense a lot. I think we’ve covered a lot of ground, maybe as we do our listeners a favor and start to wrap here. I think one thing that really I spent a lot of time thinking about afterwards is with my, you know, educational systems leader hat on. One of the, my, one of my very first early board members, like Silicon Valley person said to me was like, look, if you are not as an organization or company or an entity growing, you’re dying. Like there’s only two states. You’re growing or you’re dying. And so one of the questions I kept thinking about is, what does it mean to grow as a university if you aren’t increasing the number of students you serve? And maybe their argument is that all the universities should constantly be increasing the number of students they serve. And I think we would all engage around a conversation like that potentially. But if that’s not real and true, how do you stay in growth mode without growing the number of kids you’re serving? And so I wonder is that what has happened over universities, which are some of the oldest institutions in our society, fairly young society, but nonetheless, some of the oldest ones. And is that why they are such complex bundles with so many constituents, is because that was how they were growing, so they wouldn’t.

Michael Horn: No, I think that’s really interesting. I think it points Diane to, again, a bunch of the colleges, elite colleges over the last 15 years have added to their class. Yale added 200 students per class. It cost half a billion dollars to do in capex.

Diane Tavenner: Wow.

Michael Horn: These places have negative economies of scale. And so I think you’re right. That pours over into administration. It pours into research. I’ll make the provocative statement. I’m glad that there’s some institutions that are research first, but I think they should advertise themselves as such and not try to be all things to all people on the other part of the spectrum.

Diane Tavenner: That’s probably a good lead into because you’ve led us towards solutions. So let’s wrap here and then.

Michael Horn: Perfect place to stop anyone with what we’ve been reading or watching because you know what we’ve been listening to. And so we’re going to stop there. And Stacey, thank you for joining us on this first.

Diane Tavenner: Absolutely.

Michael Horn: Stay tuned. Don’t go far. We’re going to have you back on our next episode. Thank you all for bearing with us and engaging with us on this episode of Class Disrupted.